PLG vs. ABM: Can they co-exist?

Introduction

When you think of Product-Led Growth (PLG) businesses, you tend to think of giants like Zoom, Calendly or Asana along with their finely tuned user funnel.

But behind every PLG business exists a sales team. Once a business progresses past a certain point, a sales team is an inevitability because larger customers don’t always want to buy by putting their credit card details in (at least, for the time being according to Mckinsey).

But can this type of idea work at smaller businesses? Startups tend to sell via one motion or the other - bottom-up PLG, or top-down sales, typically depending on the cost of their offering. But what about those in the middle?

In this article, we’re going to make the case for splitting time between PLG and an Account-Based Marketing (ABM) strategy for sales as a way to create a winning sales engine.

Defining ABM and PLG

For those new to this terminology, imagine you're throwing a party. Instead of inviting everyone you know, you make a list of specific people who you think will have the most fun and get along well together. You tailor everything—the music, the food, the games—to what you know these people love.

Account-Based Marketing (ABM) is like that party, but for businesses. Instead of marketing to everyone, companies sell to key accounts (i.e. specific businesses) they want to win over. They customise their marketing efforts to these accounts to create a more personalised and effective approach. It's about quality over quantity.

Let's stick with the party analogy. Imagine you throw a party, and instead of you convincing everyone how great it was, the guests leave raving about it to their friends. Next time, more people show up because they've heard how fantastic your parties are.

Product-Led Growth (PLG) works similarly. Instead of relying heavily on marketing and sales teams to push the product, the product itself is so good that users naturally recommend it to others.

But whilst PLG is an excellent long term strategy for SaaS products, in the early days it often means selling to varied users many of whom don’t really fit your ideal customer profile. This is not only damaging to retention rates but also product development - how can you build a product on feedback from multiple different types of users?

Solving the 0-to-1 Sales Struggle

PLG relies on marketing to the right customer type and making the product so good that these users naturally want to pay for it. It’s about creating an easy and helpful experience that a corner of the market love right away. And frankly, it’s the way that most latter stage B2B businesses ought to go based on buying trends.

But it’s often quite challenging to get it spot on in the early days before product market fit (PMF) is achieved. The market will reject products that don’t deliver on their promises. Due to lack of PMF, poor customer selection or otherwise, it can be really difficult to make PLG work effectively.

However, one of ABM's fundamental principles is the diligent selection of the right prospects. These are prospects that you know will fit well with the product and that easily understand your sales spiel. They’re feeling the pain and you know you can solve it for them.

Selling to your ideal customer sets you up for success in the long term. Not only do you build a customer base that retains at an excellent rate, but you also focus your energy on building a product that solves their problems. Doing so puts you on a firm track to achieving PMF and scaling.

Avoiding Sales Myopia

ABM has its shortcomings in the early stages too. Exclusively using this as a sales strategy often means building a product around a handful of customer requests instead of a problem. In the end, you may end up being more of a dev shop than a product company.

Focusing on a company as a market-of-one ignores the user experience in favour of the buying persona. But an end users’ failure to adopt a product is almost always a recipe for churn. And you cannot sell your way out of poor adoption. Customers are empowered enough to realise your product doesn’t solve what they want it to and to cancel their contract.

But by pairing these selling strategies with a PLG mindset, you can avoid falling into this trap.

Product-led businesses focus exclusively on solving a problem for a user base - not building something that a single customer wants. And by doing so, these products typically work far better than enterprise-grade software that tries to have an answer to everything.

Different Ways to Measure Success

PLG and ABM gauge success differently.

PLG focuses on user count and adoption, using metrics like DAUs and feature usage to evaluate product performance. These insights guide teams in improving the most valuable product aspects.

ABM focuses on how receptive and engaged these important customers are. Metrics like customer engagement scores and conversion rates from targeted campaigns show how well the product is received by those in the ideal customer profile.

As a result of using both methods, you get a diverse mix of quantitative and qualitative feedback from both prospects and users alike. This makes for an excellent all-around antidote to poor product experiences and ineffective sales and marketing.

Balancing Resources

Combining PLG with ABM is also just a sensible way to manage resources. PLG drives growth on its own after the initial time investment - cutting down on the cost of getting new customers because the product often sells itself.

But for those deals where the product can’t sell itself, focusing 100% of commercial resources to win them over ensures a high return on investment for sales. Something that startups demand.

This type of strategy is akin to load balancing. Sending the limited resources where they’re most needed or most effective is an excellent idea for smaller organisations or those without a developed sales and marketing function.

Summary

Whilst this type of dual-pronged approach to selling might not work for every product, it’s a powerful combination when executed well.

For too many companies, being reliant on a self-serve motion is the tried and tested route. But as many will tell you, complete reliance on this can lead to poor qualified, duplicate or fake accounts. If you’re interested in this subject, check out this article about how Clay found out that 47% of their accounts fell into these categories.

Instead, pairing PLG with ABM is a great way to build a strong customer base that generate feedback loops and data points that exponentially improve your product development process.

And of course, you can use whomso to give ABM a shot… 😉